Chairman’s Statement

Chair’s Statement

Chair of the Board, Phil Austin MBE, heads a highly experienced team of Executive and independent nonExecutive directors in providing strategic leadership of Jersey Electricity, within a framework of robust corporate governance and internal controls, to promote the long-term success of the Company.

The COVID-19 pandemic has again brought continued challenges for our Island community and Jersey Electricity. Though we avoided another total lockdown, public health restrictions imposed by the Government of Jersey as part of its COVID-19 Winter Strategy continued to disrupt life and business. As cases escalated from the start of October 2020, working from home was reintroduced, and non-essential retail and social venues were closed. The Company and its employees again responded well and, indeed, benefited from lessons learned earlier in 2020 when the pandemic first took hold. We maintained rigorous standards to keep our people and the community safe, while ensuring the continuity of electricity supplies for homes, businesses, Government, and other essential services. New technologies, rapidly deployed among the workforce in the first lockdown, are now mainstream and ensured a seamless switch to home working, where practicable, and continuity of all our other business functions. The result is that we maintained high levels of flexibility, productivity and performance throughout.

Performance

Revenue for the year to 30 September 2021 at £118.6m was 6% higher than in the previous financial year. Profit before tax for the year to 30 September 2021, was a strong £19.1m against £14.8m in 2020. However, if the non-cash upside from the revaluation of investment properties is excluded in both years, along with the non-cash cost of £1.8m for the exgratia award for pensions in service in 2021, the underlying year-on-year profit before tax is £14.8m in 2021 against £14.3m in 2020, an increase of 3%.

The Board has therefore recommended a final dividend for the year of 10.20p, a 5% increase on the previous year, payable on 24 March 2022.

We also continued to achieve high levels of non-financial performance, including our annual Customer Minutes Lost (CMLs) figure, which is unchanged at a low level of five CMLs, and our independently assessed Customer Service score, increased to 78.4 in 2021 from 77 last year.

French fishing dispute

During the year, we have also seen an escalation of political issues between the EU and the UK on fishing rights between France and Jersey, raising questions about energy sovereignty and the security of supply of imported electricity between Europe and the Channel Islands. We have taken such matters very seriously and have liaised closely with senior civil servants and politicians in Jersey and the UK. Whilst we view these matters as being political, we have taken the

opportunity to review and enhance our contingency plans, including establishing arrangements to bring additional generating capacity into Jersey, should that be necessary. We have fi rm contractual relationships with parties in France from whom we have been importing power over the last 37 years and they have confi rmed that such commitments to supply electricity are robust. Furthermore, whilst we remain compliant with our published Security of Supply Standard, we are currently reviewing it in the light of the Island’s carbon neutral ambitions and its dependency on electricity.

Electricity markets

We have seen unprecedented volatility in energy markets during 2021, which has resulted in many UK suppliers going out of business, and the Ofgem regulated cap on UK electricity prices rising by around 20% since April 2021. This is expected to materially rise again, when formally reviewed in early 2022. Energy prices in the UK, including gas, have risen by an even higher quantum. We are not immune to these conditions, but our hedging policies have greatly sheltered Jersey customers from the material rises being experienced elsewhere, with the period 2022-2024 being largely hedged for the price we will pay for electricity and, to a lesser extent, the foreign exchange requirements we need to settle such liabilities.

We announced in October 2021 that a 4% tariff rise would be implemented from 1 January 2022, and although this is unfortunate, it is far lower than increases elsewhere. Even after this rise we will continue to benchmark very favourably against other jurisdictions, with the UK price cap currently being 46% higher than Jersey Electricity’s standard domestic tariff .

Climate change

The Intergovernmental Panel on Climate Change’s (IPCC) 2021 report calls for immediate, rapid, and largescale reductions in greenhouse gas emissions. In Jersey, the appetite for action was apparent from the recommendations of the Citizens’ Assembly on Climate Change, to which we gave our full support. The contribution of Jersey Electricity to decarbonising electricity was noted by the Assembly as well as the opportunity for Jersey to do much more. We now look to our Government to set policies to achieve the Island’s carbon neutrality ambitions, to which we are fully committed. We continue to assess the investment needed to meet these ambitions and we have already started to deliver new infrastructure to meet the forecast increase in demand that carbon neutrality would bring. We see this as a huge opportunity for growth and believe the grid is largely in place to achieve this quickly and cost eff ectively.

Corporate governance

Last year, in line with the UK Corporate Governance Code 2018, I identifi ed a number of key areas of focus for the Board in the year ahead. I am pleased to report that we have made good progress in all these areas and commentary on each of them is included later in this report, as detailed below.

• Workforce diversity, p8, 9 • Culture and engagement, p10, 11 • Stakeholder engagement, p28 • Business effi ciency and innovation, p32 • Risk and risk management, p20, 21, 55 • Review of business model p23

Additionally, in accordance with the Code’s principles and provisions, details of the activities of the Nominations Committee, Audit & Risk Committee and the Remuneration Committee are contained in their separate reports on pages 69, 72 and 75 respectively.

The Board’s key areas of focus for 2022 are:

• Progressing stakeholder engagement • Extending workforce diversity • Developing culture and engagement • Exploring energy sourcing strategies to facilitate Jersey’s net-zero carbon emissions

As indicated in my 2020 Report, Aaron Le Cornu was retiring in March 2021 at our AGM. I would like to thank him for his contribution to the success of Jersey Electricity from 2011 until he retired during this year.

Non-Executive Director Peter Simon, who joined the Board in 2019 and sat on our Audit and Risk and Remuneration Committees, stepped down on 31 August 2021. I would like to thank Peter for his insights and expertise and for a signifi cant contribution over the last two years. The recruitment process to fi nd his successor is underway.

Further information on the Company’s Governance is detailed later in the report, p64.

In conclusion

I’d like to conclude by thanking the entire workforce for their outstanding commitment and dedication, which has delivered an excellent business performance in very diffi cult circumstances. Their expertise and resilience have shone through and they should be very proud of their achievements.

I would also like to thank the Board for their hard work and commitment throughout the year, and our shareholders for their continued support. The coming years will have their challenges, but there will also be opportunities, and I am very confi dent that the Company is well placed to take advantage of them.

15 December 2021